Market News

(Bloomberg) -- Oil eased after a three-day advance as traders assess the fallout from Ukrainian attacks on Russian energy infrastructure and a Federal Reserve interest rate decision later Wednesday.

Brent was around $68 a barrel after gaining 3.2% in the previous three sessions. Ukraine attacked the Saratov refinery in its latest strike on Russian energy facilities — which have helped cut the OPEC+ member’s production to its lowest post-pandemic level, according to Goldman Sachs Group Inc.

The recent gains haven’t been enough to push oil out of the $5 band it has been in for most of the past month-and-a-half, buffeted between geopolitical tensions and bearish fundamentals. The accelerated return of OPEC+ supply has boosted predictions that a glut will form later in the year, while surging oil tanker earnings are offering a sign of higher output.

Later Wednesday, the Federal Reserve is due to make a decision on interest rates. A quarter-point cut and three more by April are currently priced in.

Oil markets are focused on Ukrainian attacks on Russian energy infrastructure, as well as the wider risk of escalation following a drone incursion into Poland last week, said Emily Ashford, head of energy research at Standard Chartered Plc.

“We think a 25 basis-point Fed cut is priced in, but a 50 basis-point surprise would be further risk-on for markets,” Ashford said in reference to the imminent Fed decision.

In the US, an industry report showed crude inventories fell by 3.4 million barrels last week. That would be the biggest drop in a month if confirmed by official data later on Wednesday.

Brent’s second-month implied volatility was subdued after it fell to the lowest in more than three weeks on Monday, as outright prices remain firmly stuck within the narrow range seen since early August.

--With assistance from Sarah Chen and John Deane.